Nissan Motor has signed a basic agreement to acquire a 34% stake in Mitsubishi Motors in a 237bn yen deal (£0.14bn).

Under the terms of the agreement, Nissan will purchase 506.6m newly issued Mitsubishi shares at a price of 468.2 yen (£3) per share, equalling a 34% stake, as part of a strategic alliance. This will also make Nissan the largest shareholder in Mitsubishi.

The two companies also agreed to cooperate in areas including purchasing, common vehicle platforms, technology-sharing, joint plant utilization and growth markets.

Nissan and Mitsubishi have a history of working together. For example establishing a joint venture in June 2011 to specialise in the planning and development of minicars.

The 34% stake acquisition is subject to the signing of a definitive Alliance Agreement, expected by the end of May 2016, the signing of a shareholders agreement with the current Mitsubishi Group shareholders of MMC and regulatory approvals. It is expected to close by the end of the year.

Commenting on the transaction, Carlos Ghosn, chief executive and president of Nissan, said: "This is a breakthrough transaction and a win-win for both Nissan and Mitsubishi Motors. It creates a dynamic new force in the automotive industry that will cooperate intensively, and generate sizeable synergies. We will be the largest shareholder of MMC, respecting their brand, their history and boosting their growth prospects."

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The stake acquisition between Nissan and Mitsubishi comes after the two companies have been dragged into the emissions scandal which has been rumbling on since 2015.

In April, Mitsubishi admitted it had conducted testing improperly to present a better fuel consumption than actual rates for two Mitsubishi models in Japan, as well as two Dayz models which it produced and supplied to Nissan.

On May 16, South Korea’s Environment Ministry said it planned to fine Nissan’s South Korean operation for manipulating tests on Nissan Qashqai, according to press reports.

In the wake of the Volkswagen emissions scandal in 2015, the South Korean agency tested 20 diesel vehicles, of which the Nissan Qashqai failed.

The ministry said it would fine Nissan Korea 330m won (£195,017) and recall 814 Qashqai vehicles sold since November.

In the reports, Hong Dong-kon, a director at the ministry, is quoted as saying: "Usually, some cars turn off the emission reduction device when the temperature reaches 50 degrees Celsius, to prevent the engine from overheating. The Qashqai was the only vehicle that turned it off at 35 degrees.

"All auto experts expressed the opinion that it was clearly a manipulation of the emissions reduction device."

Nissan responded by saying it does not manipulate data related to its vehicles.

The car manufacturer said: "The Nissan Qashqai has been correctly homologated under Korean regulations. Nissan has not and does not employ illegal defeat or cheat devices in any of the cars that we make. Furthermore, following stringent testing and using similar standards to the Korean tests, EU authorities have concluded that Nissan vehicles they tested used no illegal defeat device.

"Although the conclusions reached by the Korean authorities are inconsistent with those of other regulators, Nissan will carefully assess and consider appropriate next steps."

Nissan added that it is committed to upholding the law and meeting or exceeding regulations in every market where it operates and is continuing to work with the Korean authorities.